Dot Hill Announces Strategic Acquisition and Plans to Expand RAID Footprint With Launch of New Storage Software
September 23 2008 - 8:55AM
PR Newswire (US)
CARLSBAD, Calif., Sept. 23 /PRNewswire-FirstCall/ -- Dot Hill
Systems Corp. (NASDAQ:HILL), a provider of world-class entry-level
and midrange external storage solutions for OEMs and systems
integrators (SIs), today announced it will acquire the RAIDCore(TM)
and NAS (Networked Attached Storage) intellectual property assets
from Ciprico, Inc. (NASDAQ:CPCI). The assets to be acquired include
all of Ciprico's rights to its RAIDCore technology and products
along with specified rights to Ciprico's NAS intellectual property.
Under the terms of the agreement, Dot Hill will purchase the assets
for: (i) cash of $2.25 million less a credit back to Dot Hill for
the previously announced debtor-in-possession loan to Ciprico of
$225,000; (ii) a $1 million unsecured interest-free note maturing
in March 2012; and (iii) subsequent payments of 6.67 percent of net
revenues from the RAIDCore and NAS assets over the course of 42
months and not to exceed $2 million. The material terms of the
acquisition are further described in Dot Hill's Form 8-K filed with
the Securities Exchange Commission on September 23, 2008. The
company stated that it had hired many of Ciprico's RAIDCore and NAS
engineering team and expected to incur incremental operating costs
of approximately $3 million per annum associated with the purchase
of these assets. Given the relatively nascent state associated with
RAIDCore revenues, the company does not expect that the purchase of
the RAIDCore and NAS assets will be accretive in the first year.
The addition of these assets will position Dot Hill to serve the
growing enterprise class software RAID market focused on server and
workstation based deployments of data protection. According to IDC,
more than two million servers were shipped in the second quarter of
2008, with 11.2 percent year-over-year growth. Over the next three
to five years, it is estimated that enterprise-class versions of
software RAID will become standard features of entry-level and
mid-level servers as RAID continues to move from higher end
platforms into more mainstream offerings. The acquisition of
Ciprico's RAIDCore assets will allow Dot Hill to take advantage of
this trend. "Dot Hill has long been a leader in providing proven,
scalable storage solutions to the OEM and systems integrator
community," said Dana Kammersgard, president and chief executive
officer of Dot Hill. "The addition of the RAIDCore intellectual
property and products and the Minneapolis-based engineering and
support expertise will open new market opportunities for Dot Hill
in the growing host-based storage arena on a worldwide scale. "This
is a significant step forward for Dot Hill," continued Kammersgard.
"These products complement Dot Hill's existing world-class line of
entry-level and midrange external hardware storage arrays and have
the potential to increase our margins and may allow us to leverage
opportunities at new and existing OEM and system integrator
partners worldwide. We believe the breadth of the offerings -- from
software RAID and NAS through general purpose and ruggedized
carrier-class midrange systems -- will strongly position Dot Hill
in the marketplace." RAIDCore is a pure software implementation
that takes advantage of today's high performance multi-core based
servers rather than the specialized hardware acceleration engines
that are used in external RAID systems. This creates an extremely
cost-effective, yet robust internal RAID solution that OEMs and
systems builders can now deploy on entry-level and higher level
servers without significant cost burden. A key differentiator of
the RAIDCore architecture is that it supports a highly portable,
hardware and chip agnostic approach to high performance,
feature-rich host software RAID, allowing OEMs, ODMs, motherboard
merchants and appliance builders to support a wider range of
hardware platforms with a single unified RAID software stack and
management solution. Competitive offerings tend to be tied to a
specific vendors' custom silicon, restricting options in server
hardware architecture or limiting RAID functionality to that
provided by the silicon supplier. "The introduction of higher
capacity drives along with smaller form factors and high
performance multi-core CPUs is driving this requirement for RAID
data protection on servers and high-end workstations," said Cooper
Cowart, vice president of marketing for Dot Hill. "In addition, the
NAS technology provides an excellent starting point for certain of
our OEM and systems integrator partners to create efficient and
cost-effective NAS appliances that leverage RAIDCore and the
abundance of CPU cycles available in common, off-the-shelf server
class Intel compatible hardware." The RAIDCore products include the
VST Pro software package recently launched by Ciprico, as well as
several of the new series of RAIDCore host bus adapters. Dot Hill
expects to target distribution of these products via its existing
and new OEM customers that have offerings focused on the x86-class
server and workstation market as well as through other routes to
market. About Dot Hill Systems Corp. Delivering innovative
technology and global support, Dot Hill (NASDAQ:HILL) empowers the
OEM community to bring unique storage solutions to market, quickly,
Hill's RAID technology is the foundation for best-in-class storage
solutions offering enterprise-class security, availability and data
protection. The company's products are in use today by the world's
leading service and equipment providers, common carriers, advanced
technology and telecommunications companies as well as government
agencies. Dot Hill solutions are certified to meet rigorous
industry standards and military specifications, as well as RoHS and
WEEE international environmental standards. Headquartered in
Carlsbad, Calif., Dot Hill has offices and/or representatives in
China, Germany, Japan, United Kingdom and the United States. For
more information, visit us at http://www.dothill.com/. Statements
contained in this press release regarding matters that are not
historical facts are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act. Because
such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by
such forward-looking statements. Such statements include statements
regarding the effect of Dot Hill's acquisition of assets from
Ciprico on Dot Hill's business and financial results, statements
with respect to future operating expenses and the potential market
opportunities associated therewith. The risks that contribute to
the uncertain nature of the forward-looking statements include
unforeseen technological, intellectual property, supply or
engineering issues and changing customer preferences, and the
additional risks set forth in the forms 8-K, 10-K and 10-Q most
recently filed by Dot Hill. All forward-looking statements
contained in this press release speak only as of the date on which
they were made. Dot Hill undertakes no obligation to update such
statements to reflect events that occur or circumstances that exist
after the date on which they were made. DATASOURCE: Dot Hill
Systems Corp. CONTACT: Hanif Jamal of Dot Hill Systems Corp.,
+1-760-476-3825, Web site: http://www.dothill.com/
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